RESIDENT STATUS : TUTORIAL 2
QUESTION 1
A. Mitchell, a New Zealand financial advisor, arrived in Malaysia on 1
August 2016 and left Malaysia permanently on 30 June 2021. Details of
her stay in Malaysia are as follows:
Year Period of Stay Remark
2016 1/8/2016 – 31/12/2016 Note 1
2017 1/1/2017 – 31/8/2017 Note 2
2018 6/1/2018 – 25/7/2018
2019 10/3/2019 – 30/4/2019
18/7/2019 – 31/8/2019
2020 31/5/2020 – 28/8/2020
2021 1/1/2021 – 30/6/2021 Note 3
Note 1 : From 15 October to 30 December, Mitchell was in New Zealand
to visit his mother who was undergoing knees surgery.
Note 2 : From 1 March to 31 July, she was sent by his employer in Malaysia
to several countries including Australia, Singapore and France to
complete a number of financial projects.
Note 3 : She went to London for holiday from 17 April to 1 May 2021.
Required:
Determine the tax residence status of Mitchell for the relevant years of
assessment 2016 until year of assessment 2021. Provide the relevant
sections and reasons to support your answers.
(10 marks)
B. State the circumstances in which leaving Malaysia for umrah is still form
the consecutive 182 days in ascertaining the residence status for s 7(1)
(b).
(2 marks)
C. Briefly explain the requirements of an efficient tax system
(8 marks)
(Total: 20 marks)
SOLUTION
A.
YA Basis period No of Status Section Reasons
days
2016 1/8/2016 – 14/10/2016 75 R/ 7 (1)(b)/ Stay in Malaysia less than
15/10/2016 – 77(TA) 182 /days and the period
30/12/2016 is linked/ to a period of
31/12/2016 1 182 days or more
76 consecutively in YA2017
including temporary
absence (TA)
2017 1/1/2017 – 28/2/2017 59 NR/
1/3/2017 – 31/7/2017 153(TA)
1/8/2017 – 31/8/2017 31
90
201 6/1/2018 – 25/7/2018 201 R/ 7 (1) Stay in Malaysia at least
8 (a)/ 182 days/
2019 10/3/2019 – 30/4/2019 52 R/ 7 (1)(c)/ Stay in Malaysia for at
18/7/2019 – 31/8/2019 45 least 90/ days and 3/4
97 immediate preceding
years/ were resident
(YA2018, YA2016) or in
Malaysia for 90 days
or more (YA2017)
202 31/5/2020 – 28/8/2020 90 R/ 7 (1) Stay in Malaysia for at
0 (c)/ least 90/ days and 3/4
immediate preceding
years/ were resident
(YA2019, YA2018, YA2016)
or
in Malaysia for
90 days or
more
2021 1/1/2021 – 16/4/2021 106 R/ 7 (1)(c)/ Stay in Malaysia for at
17/4/2021 – 1/5/2021 - least 90/ days and 3/4
2/5/2021 – 30/6/2021 60 immediate preceding
166 years/ were resident
(YA2019, YA2018,YA2016)
or
in Malaysia for 90 days or
more
(1/2 x 20 = 10 marks)
B.
Leaving Malaysia for umrah not exceeding 14 days in the aggregate:, thus
regarded as temporary absence: to form the consecutive 182 days. The 14
days umrah need not be consecutive and can relate to any one of the two
YAs:.
(2 marks)
C.
1. Equitable tax burden
The distribution of the tax burden should be equitable or fairly executed.
Everyone should be made to pay his or her fair share of the taxes
2. Minimizing economic distortion
Taxes should be chosen to minimize interference with economic decisions in
otherwise efficient markets. In doing so, the concept of excess burden or
welfare loss should be considered
3. Easily understood tax law
The tax system should permit a fair administration and tax law should be
easily understood by taxpayers
4. Low compliance cost
The cost to manage tax administration and taxpayer compliance cost should
be as low as possible
(8 marks)
